The regional structure of micro and small enterprises' turnover in Finland: the strength of rural areas surprises

Micro and small enterprises play a very important role in the economy in some regions. It is interesting to know how the turnover of these enterprises is distributed in the regional structure of Finland. For micro and small enterprises, this can be examined with a high reliability from the statistics based on their home locations. For larger enterprises with multiple establishments or with an operating model that relies heavily on subcontracting, looking at the spatial distribution of turnover is more challenging – and again also the regional value chain should be more widely taken into account.
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Micro and small enterprises together accounted for near a quarter (23.6%) of enterprises’ turnover* in Finland in 2021. A micro enterprise is defined as an enterprise with fewer than 10 employees and have a turnover or balance sheet total** of less than 2 million euros. A small enterprise has fewer than 50 employees and a turnover or balance sheet total of less than 10 million euros. More specifically, the turnover of micro enterprises was 60.1 billion euros (12.2%) and that of small enterprises 55.6 billion euros (11.3%), compared to 490.6 billion euros for all enterprises in Statistics Finland's enterprise-level FIRM_ENTER data. Micro and small enterprises account for around 97% of the number of Finnish enterprises and they form around two out of five (39%) of the total number of jobs in enterprises.

At the municipal level, the turnover of micro and small enterprises is clearly concentrated in the largest cities (Figure 1). Turnover and population are in the same order of magnitude for Helsinki, Espoo and Tampere, while Turku and Vantaa are ahead of Oulu in terms of turnover and Lahti ahead of Jyväskylä when relate to the population. The regional differences in favour of large cities are relatively strong when measured by turnover alone. However, also other indicators are also useful to apply.

When turnover is related to population, many rural municipalities are highly efficient in the micro and small enterprise size category and are well visible in the map (Figure 2). Of course, in relation to the working age population, the difference would be even stronger in many regions. The map visualisation of turn over distributions related to municipal population shows clear hot spots and regional formations. The ability of micro and small enterprises to generate turnover is particularly strong in the “Ostrobothnia” regions, which covers the southern part of North Ostrobothnia, South Ostrobothnia, Ostrobothnia and also parts of Central Ostrobothnia. Other strong areas in the north include western and northern Lapland. In southern Finland, the region of Southwest Finland and parts of Satakunta region, as well as capital city Helsinki and the Eastern Uusimaa region, are strong in this category. In eastern Finland, the areas near Savonlinna are emphasised. Among cities with more than 50 000 inhabitants, Helsinki is the most efficient producer of turnover for micro and small enterprises relative to population, followed by Seinäjoki and Lahti. Among the smaller cities and towns of 10 000 to 50 000 inhabitants, the strongest in relation to the population are Mariehamn, Kalajoki, Kankaanpää and Ylivieska.

This regional mapping of micro and small enterprise turnover underlines the importance of using several parallel indicators to examine regional phenomena, as otherwise essential findings can be obscured and overshadowed by classifications and distributions. It is therefore healthy to bring different perspectives into the analysis. Working on the business statistics, it was a great pleasure for us to see how broadly also rural areas emerged in the visualisation. At the same time, it was interesting to experimentally visualise the municipal distributions as bar charts in relation to height on the map together with the traditional choropleth map approach.

Map showing the turnover of micro and small enterprises in 2021 by municipality in relation to the population (in addition to the coloured classification, the height of the municipality shows the turnover in relation to the population).
Figure 2: Turnover of micro and small enterprises in 2021 by municipality in relation to population (in addition to the coloured classification, the height of the municipality indicates the turnover in relation to population).
Map showing the turnover of micro and small enterprises in 2021 by municipality in relation to the population (in addition to the coloured classification, the height of the municipality indicates the turnover in relation to the population).
Figure 2: Turnover of micro and small enterprises in 2021 by municipality in relation to population (in addition to the coloured classification, the height of the municipality indicates the turnover in relation to population).

The analyses presented here are part of the Resource-Wise Growth Factors and Municipal Vitality (REAKT) (Resurssiviisaat kasvutekijät ja kuntien elinvoima REAKT in Finnish) project, funded by the Kunnallisalan kehittämissäätiö foundation. The project examines the economy, employment, exports (goods and services) and growth and supporting regional factors of small enterprises by municipality, using register data covering the whole country. One part of the project focuses on also the location of fast-growing gazelles in the Finnish regional structure, and the second part of our work on municipal time series of business data for 2010-2021.

Authors:
Ossi Kotavaara, PhD, Adjunct Professor, Research Director, Regional Excellence (REx) research group, University of Oulu Kerttu Saalasti Institute
Pauliina Björk, M.Sc. (Tech)., M.A. Project Researcher, Regional Excellence (REx) research group, University of Oulu Kerttu Saalasti Institute

* The types of enterprise are limited liability companies, general partnerships, limited liability partnerships, cooperatives and natural persons.

** Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (Text with EEA relevance) (notified under document number C(2003) 1422) Official Journal L 124 , 20/05/2003 P. 0036 - 0041